The bulls are running again, everyone lamenting about Bitcoin possibly going, to $100k some said, to $50k some said, maybe just $25k and probably you also hear some saying the bubble about to get puffed up, well amidst this whole lamentation and FUD(fear uncertainty and doubt) you still decided to join the race of the crypto evolution and now you took the red pills neglecting what the media or friends are saying but deciding fully to go in at all cost and make your way to financial freedom.
Congratulations my friend, i need not be a prophet or a psychic to tell you just made the best decision of your life. Now you took the red pills, and closed your eyes so tight awaiting for the next thing to happen to you however eyes get opened and you are still the same, and now you invested in some cryptos and seeing the market running reds on your investment. Oh, my GOD!!! what have i done, how can i survive and provide for my family with this, so many thoughts start going through your head.
Now, you are left with no other choice than to just HODL, not a bad choice either a very good one for that matter, **But What If I Tell You**, you can actually hodl your coins long term and as well generate and grow your benjamins(USD) in your bank to cover up your basic needs without having to sell your precious HODL gems.( trust me i know how hard it is to let go of my babies(cryptos))
Wheew, that was a long introduction, damn!! hahaha i nailed it i guess. lol, if you found that short imagination interesting drop some accolades for me below in the comments or the upvotes :)....Without much ado, lets go straight to business..
This article will be broken down in series to reduce the length, i will be covering about, trading, major crypto exchanges, how to effectively manage your portfolio, how to profit from the crypto market, advantages of trading the crypto market over the fiat market, leveraging...
Before we continue keep in mind that trading in general, be it stocks, forex, bonds, or crypto is a risky endeavour, and amongst all crypto market is the most volatile they rise and fall without warning. This means that a cryptocurrency’s past performance is not an indication of its future, and achieving consistent profitability is never guaranteed. As always, you should never trade with capital that you aren’t prepared to risk losing.
The concept of trading...
Trading in general is an act of buying and selling or a means of exchange, in the currency trading market as at now there are basically two major types of trading, fiat(traditional currency usually classified as forex trading) and the crypto(digital currency) currency trading.
Irrespective of any form of trading activities been carried out, the whole essence for currency trading is to make profits by buying at a cheaper rate to sell at a higher rate, else you just want to swap for some domestic usage, aside that, investors or traders are always keen about their profits and investment returns.
Is trading profitable
Its necessary to understand that in all business we encounter loss sometimes however what makes the business growth firm or successful is the ability to cover up losses with higher profit returns and minimize loss with all possible means.
Trading the financial market is highly profitable if you know how to but if you dont then you'd be among those feeding the whales, hmmm, you dont wanna be down there trust me, it sucks.
To understand the profitability of the crypto market lets take into consideration of the everyday fiat currency we hear about.
Assuming in the beginning of the year lets say january you had about 10,000$ in your account and then you decided to exchange you USD with another currency trader or at the bank or via the broker for British pounds say at the rate of 1.30USD per 1 GBP after the successful exchange you will be left with about 7700GBP, after a period of about amonths or even probably a week or two US economy got so bad and the value of the USD drops in the world financial market or probably the value of GBP increased as the economy got much better.
Now, the current exchange rate for the USD against the GBP had risen to about 1.65USD per GBP you then exchange back your currency or sell your GBP holdings for USD with the appreciated rate, total exchange would now result 7700$ * 1.65 = $12,700, total profit gained would thereafter be $12,700- 10,000$(initial investment)= 2700$ (27%) profit growth..
keep in mind it could as well go the reverse case and you could loose as well, but don't focus much on negativity, who said you cant be right all the time????
i do hope this was easy enough to comprehend
Having understand the above illustration crypto trading shouldn't be difficult to understand, Forex trading and crypto trading works entirely in the same pattern, the only major difference is in the currency and exchange, in crypto we exchange crypto currencies rather than fiat currencies, such as TRON (TRX), BITCOIN(BTC) LITECOIN(LTC)... and the rest of their kinds.
Lets assume you purchase 1bitcoin early last week at the rate of $5800/btc and after 1week, bitcoin had grown to about $7500/btc, you then sell off your bitcoins at the appreciated rate your profit would be $7500-5800 = $1,700 (est 35% your investment)
most cryptos as well are not easily traded with USD but rather with bitcoin and thus their values are calculated in satoshi(unit of bitcoin), we will talk about this later as we progress
Exchanges as a medium or channel for Crypto Trading
An exchange plays the same role as a broker to forex traders, exchanges link up buyers and sellers to carry out trading activities and in turn charge a little token for the facilitation of the trades.
Unlike forex brokers most exchanges dont buy directly from you but rather they just link you up with an immediate buyer interested, the more widely used the exchange is the more the liquidity(availability of cash) of the exchange the better the trading activities of the exchange.
Some top exchangers with good trading volume and a wide variety of coins
Note: its usually recommended to have an account with at least two major exchangers as due to coin listing some tokens or coins may be available on some exchangers and not available on others.
Deciding the type of trader you want to be
You can either decide to be a long term trader(HODLER) where you take trades on swings or based on the speculative value you lay on the coin, long term traders usually focus on the future of a project or coin instead of the daily dips and spikes, analysis are usually solid and could be for weeks, months and sometimes years, a typical example are those who purchased ETH when the price was about 10$ and sold when the price had grown to about 1000$, keep in mind its you need alot of discipline to be a long term trader.
On the other hand you can also decide to be a day trader or short term trader where you take full control of the daily price volatility and market corrections on a shorter timeframe for quick gains. Day traders as the name implies usually take trades for just few hours and sometimes a day and possibly few days but not for weeks...
Both day trading and long term trading are profitable when you hve a good knowledge about it, however for short term traders , alot of technical analysis is necessary as well as fundamentals.
Why trade the crypto market instead of the fiat market
Currently the fiat market has a market cap of over 4trillion Euros, thats some dope shit making the market liquidity flow like milk and honey, whereas the crypto market as at the time of writing has only about $290 billion (a market cap of 4 trillion euros would do alot of wonders in the crypto market) although i believe in the future the crypto market will surpass or tally.
So why trade the crypto market?
1. DECENTRALIZATION: the major reason which makes me prefer the crypto market over the fiat market is the concept of decentralization, crypto currencies been decentralized makes its value based on what the people (you and i) think about it, if the masses think coin gives more value than another then that coin will automatically have more value than the other as more money will be pump into the preferred coin, more usage and acceptance will thus increase the price value of the coin.
This is different in the fiat market, as the fiat market is based on the economy of the country as well as a centralized body(the government) the value of a fiat currency is based on what the government says and do about it and not based on what the people think of it, take for instance.
In essence the people(you and i) have more say in the crypto market than in the fiat market.
i once watched a clip of a guy who single handedly dropped down the value of an altcoin from 80sats to about 40sats and then back to 80sats, it was really crazy.
how did he do it, on livecoin exchange, the current trading rate of the token to btc was 80sats now everyone was buying an selling at the close rate after 2min the guy created an order for sell at 40sat and immediately buyers dropped down their value to 40sat and we experienced a sharp spike in the market as the volume sold was really high, hackers also do this to market manipulations.
This may be used positively or negatively but the key thing to note is your say counts in the market and every decision you make affects the general market, this aint easily seen in the fiat market...
2. 24/7 MARKET: The crypto market never close as trading activities happens 24hrs a day and 7days a week nonstop, this makes it so easy to fully monitor the market and carry out trading activities at any point in time, unlike the fiat market when trades stop during holidays, weekends, and some special celebrations.
3. NO MARGIN CALLS: unlike forex trading where you get margin calls when trades go against your analysis much more than your account can handle, in crypto we barely have margin calls, when a trade is open you actually buy the coin and hodl it as well even though you are trading, when the satoshi or usd value drops the coin itself doesnt change but rather the alternate value in usd changes.
That is, say you purchase 100$ worth of electroneum at 0.01 thats 10,000 ETN tokens, if the price of etn drops to say 0.001 it doesnt change the current balance of 10,000ETN rather only the value in respect to USD changes, i hope you understand.
On the other hand in forex when you take a trade you only leverage your account on that trade, and when the trade goes against you, your account keeps draining and could probably get to a margin call if not well monitored or corrected....
keep in min as well that some brokers also runs crypto trades paired with USD like the forex trades also where margin calls exist, however a real crypto exchanger does not..
4. CHEAP FEES: Right from the fees used in finalizing a trade, till the withdrawal and transfers of crypto coins, the fees charged are comparably much lower than that of the fiat market be it the use of credit cards or debit cards or bank wire, crypto is much cheaper and faster.
5. HIGH VOLATILITY RATE: The crypto market as earlier said is the most volatile market ever, this characteristics makes it a double edgedimg src
sword and as such it can be very profitable if you use it right or could put you in great loss if not well analysed like they say the higher the risk the higher the reward.. (mind you, you cant be too accurate in your analysis anything can happen, its the market baby, just be wise and use good money management)
Guys we will stop here for this article to avoid it being too lengthy, please do drop a comment below if you have any question or want me to talk about anything special in my next article.
In the next articles on this series, we will be discussing in more details about:
- The concept/implementation of technical and fundamental analysis in crypto trading
- Proper psychology and money management
- Following crypto trades signals
- How to give a crypto signal
- Funding your crypto trading wallet
- Withdrawing your profits